'US Dollar correction likely before the next major trend move' - David Rodríguez, DailyFX

   David
Rodríguez

PROFILE:
• Current Job:  Quantitative Strategist for DailyFX.com in New York.
• Career: Specialized in statistical studies in currency trading markets and algorithmic trading systems for the Managed Accounts Programs offered by FXCM.

View profile at FXStreet

David Rodríguez is a quantitative analyst for DailyFX.com, specializing in statistical studies in currency trading markets and algorithmic trading systems for the Managed Accounts Programs offered by parent company, FXCM.

He holds a degree in Economics from Williams College with heavy emphasis on quantitative methods and began trading financial markets in the tech boom and bust of 1999-2001. Since then, David's primary focus has shifted from equities to currency markets, but he continues to trade futures and futures options on a broad range of asset classes as well as currencies.

Do you believe that France and Italy's problems hinder Eurozone recovery? Will the countries manage to repair their stagnant economies before the situation aggravates?

I think Europe in general is going nowhere fast, and the European Central Bank is doing what it can to offset real structural economic issues and loss of competitiveness. The fact remains, however, that Italy has had one of the slowest growth rates in the 21st century of any Western economy, and France isn’t materially better. I think it’s entirely likely that continued underperformance will weigh on regional growth.

USD/JPY is consolidating multi-year highs above 107.00 after 2-month and 600 pips rally from 101.00; do you expect further gains despite Kuroda's word on wait-and-see?

Kuroda won’t sound the alarms on further easing as he does not want to be seen as bowing to political pressure. Yet I believe the BoJ is clearly on the path towards further QE. As far as the Yen is concerned, there’s not much in the way of price resistance in the way of USD gains until ¥110.

EUR/USD is trading below the 1.3000; do you expect consolidation time in the short term or more bearishness? Targets?

It’s entirely possible if not likely we see a US Dollar correction (EURUSD bounce) before the next major trend move. Yet momentum clearly has shifted in favor of Euro weakness. Barring a material reversal in fortunes in Europe and the United States, I think that remains true going forward.